Textile sector fears losing orders due to unavailability of cotton yarn

The fluctuations in exchange rate and the unavailability of cotton yarn is making exporters lose orders.

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Pakistan Apparel Forum Chairman Jawed Bilwani on Monday said that unavailability of cotton yarn and sudden decrease in the value of rupee against the US dollar can harm efforts made by the value-added garment and home textile segments.

The fluctuations in the rupee-dollar parity and cotton yarn not being available has resulted in the textile sector being fearful of losing orders.

Bilwani further said that “Due to this, the exporters belonging to the garment and home textile sectors fear a steep decline in exports in the coming months”.

It is important to note that in the last six months, the dollar has depreciated against the rupee by 5.58% to stand at Rs157.2 at present, while exporters had negotiated and finalized export orders at Rs166.5 per dollar, said Bilwani.

Despite cotton yarn’s price going up by 15%, it still isn’t available in the market, he complained.

“Due to these two factors, exporters are hesitant to register new orders because the cost of the production has risen in the past few months,” he said. “Exporters are taking a dual hit therefore the government should intervene to save the value-added textile export chain.”

Keeping in mind the current scenario, the government should immediately abolish customs duty on import of cotton yarn to aid the value-added garment and home textile exports of Pakistan, said Bilwani.

Read More: Cotton: Handling the White Gold Crisis of Pakistan

Federation of Pakistan Chamber of Commerce and Industry (FPCCI) former president Mian Anjum Nisar said that If the country loses textile orders, it will be a huge setback for Pakistan as the government is currently aiming to increase exports and narrow the import bill.

He also requested the government to work in the best interest of the of the value-added textile chain.

Pakistan Yarn Merchants Association (PYMA) Senior Vice Chairman Hanif Lakhany on another occasion had also stated that high yarn prices were pushing the textile-based small and medium enterprises (SMEs) to the brink of collapse.

Failure to review the tariff structure of polyester chain and allow duty-free import of cotton, polyester cotton and polyester filament would prove to be disastrous for small businesses, he added. He also warned of the breakdown of the textile industry if it is not supplied with raw materials at reasonable prices in line with the demand.

On Monday, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Sunday urged the government to allow duty and taxes free cotton yarn import from India through Wagah border.

Reports suggest that against annual predicted consumption of minimum 12 million bales, Ministry of National Food Security and Research expects only 7.7 million bales production this year. However, cotton ginners have given the lowest production estimates of only 5.5 million bales for this year.

According to the Pakistan Bureau of Statistics, Pakistan has imported around 688,305 metric tonnes of cotton and yarn while there is a minimum shortfall of six million bales. A gap of about 3.5 million bales is present that the government would need to fill through imports.

Due to the rising decline in cotton production, users were forced to import from United States, Brazil and Uzbekistan.

Last month, Minister for National Food Security and Research Syed Fakhr Imam while chairing a meeting said that the year 2020 would be a kill or cure situation for the cotton crop. The last few years of declining acreage, dropping per acre yield and sinking national production are testament to the fact that it is an increasingly challenging time for the industrial crop.

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